Wednesday, June 30, 2010

ECFA Signing Round Up

The DPP has a point that Beijing may gain some leverage over Taiwan as ECFA opens the economy. But then this has already been happening, just as it did before the Hong Kong handover. Business elites with interests on the mainland always take Beijing's side to some degree. Regionally, too, China's power will only continue to grow.Defenders of Taiwan's sovereignty have to play smarter than pretending they can command the tides. The island's separate identity and public consensus in favor of maintaining the political status quo remain strong. However, it is best to negotiate with the mainland from a position of strength: economic, political and military. That means retaining Taiwan's vitality and centrality to the world's production chains, so that other powers have an interest in the country's survival. The armed forces also need remedial attention if they are to remain a credible deterrent.

The commentator has it wrong: the pro-Taiwan side isn't attempting to command the tides, but to teach the horse to sing. This commentator also takes the common position that Taiwan needs to negotiate from a position of economic and political strength. Completely correct -- and then the commentator remarks that Taiwan can achieve that strength by becoming more economically and politically dependent on China. Wait -- how's that again?

"This agreement is not about free trade, it is about political control," said Bob Yang of the US-based Formosan Association for Public Affairs. "[It] undermines Taiwan's sovereignty and the ability of Taiwanese to determine their own future … The net effect will be to push Taiwan closer to a still repressive China at the expense of freedom and democracy."

Taiwan's main opposition parties strongly agree. Tens of thousands of protesters rallied at weekend demonstrations in Taipei. Outrage was also expressed at the blocking of a national referendum on the deal. A new referendum proposal has now been tabled. Whatever the outcome, the opposition is vowing Ma's KMT will pay a high price in local elections this autumn and in the 2012 presidential poll.

For Taiwan President Ma Ying-jeou, the deal is the centerpiece of a campaign of rapprochement he has helped engineer since taking office in May 2008. Ma argues that a trade deal with China is necessary to prevent Taiwan's economic marginalization amid growing commercial ties between Beijing and neighboring Asian countries. But he is under pressure to prove his strategy is working to Taiwan's boisterous democracy and a divided public skeptical about Beijing's intentions.

More than 30,000 Taiwanese protested the deal in the capital Taipei over the weekend. Taiwan's opposition Democratic Progressive Party have criticized Ma for proceeding without enough public input and rejecting calls for a public referendum on the agreement.

Still, polls show a majority of Taiwanese support the deal because of the economic boost it promises - although most on the island still prefer self-rule.

Polls DO NOT show a majority of the island supports the deal. Polls consistently show support in the forties. Note how the total of "more than 30,000" deprecates the actual number -- probably twice that.

Meanwhile, President Ma has seen his approval ratings dip as he's spent political capital pushing ECFA, to 28 percent in mid-June from about 40 percentin mid-2009. With the pro-independence opposition mounting a full-throated anti-ECFA campaign, he’s likely to shift back into campaign mode. That means more pro-Taiwan rhetoric and less happy talk about China.

Ma and his party will face tough local elections this November, a legislative election in late 2011, and a March 2012 reelection bid. There's already loud domestic opposition to his cross-strait economic agenda, let alone anything more ambitious.

"Ma Ying-jeou will make every effort to prove to voters that [ECFA] really brings the positive results he promised," says George Tsai, a political analyst at Chinese Culture University in Taipei. "But time is short, and people's patience is also short.

Someone out there is noting that ECFA and Ma's unpopularity are linked!

Instead, the ECFA as signed has reduced Taiwan's status as a democratic and independent state to a status similar or even lower than the PRC's "special administrative regions" of Hong Kong and Macau.

The most telling signal of this reality was the date and place of the signing, which occurred precisely on the seventh anniversary of the signing of the "Closer Economic Partnership Agreement" between the PRC central government and the PRC's Hong Kong Special Administrative Region" and the location of the ceremony in Chongqing, the location of peace talks between the late KMT autocrat Chiang Kai-shek and the late CCP Chairman Mao Zedong in August 1945.

These "coincidences sent the symbolic messages that the pact was a "party to party agreement" between the KMT and CCP and that the ECFA was parallel to the CEPAs signed between Beijing and Hong Kong and Macau.

.....

Moreover, Appendix Three of the ECFA specially excludes the right of either side to use WTO "trade remedies" and thus reduces Taiwan's defenses, such as "anti-dumping" or "anti-subsidy" duties or "national security" or cultural exceptions, against the PRC's institutionalized "social dumping."

Yes, once again, the Ma Administration sold out the island. Taiwan News claims the escape clause from ECFA is vague but the TT has a piece on it (below) that suggests otherwise. Check out that political symbolism -- on the anniversary of the Hong Kong CEPA and in the former capital of the KMT regime in China, where dictators Chiang and Mao once met. Hilariously, KMT negotiator Chiang said it was all just a coincidence. The fact that the Taiwan negotiators accepted this political symbolism speaks volumes.

The statement said the term was one of the provisions the Taiwanese team fought hard to include in the accord.

“It is the ultimate safety net,” the statement said.

“It is improper to describe it as a bargaining chip that China will use to threaten Taiwan or to demand that it toe the line,” it added.

The statement was made in response to a Chinese-language Liberty Times (the Taipei Times’ sister newspaper) report that warned Beijing could use the termination clause to demand that Taiwan behave.

Commenting on the termination clause yesterday, the Democratic Progressive Party’s (DPP) spokesperson on ECFA related issues, Julian Kuo (郭正亮), said: “It doesn’t matter either way ... the Chinese Nationalist Party (KMT) government doesn’t have the courage to activate this exit clause anyway.”

He said DPP headquarters would, along with the DPP legislative caucus, look into a proposal to table a bill that would force the KMT government to invoke the exit clause of the agreement if it were not able to sign free-trade agreements (FTA) with other countries within a year.

DPP lawmakers would also consider attempting to force the government to terminate the agreement if GDP growth did not reach government estimates, unemployment continued to increase or if average salaries remained stagnant, Kuo added.

Note that the Taiwan team says it had to fight hard to get the termination clause -- meaning that China did not want one. Think about it.

It's FTA time. Will any of the important countries stand up and offer Taiwan an FTA? Should be fun to watch.

Beijing hopes the deal signed Tuesday can lead to political accommodation. Taiwan is looking for the tighter economic links to keep the island from being economically marginalized as China's global clout grows.

Kuhn says while China views greater economic integration with Taiwan as the road to eventual unification, Taiwanese opponents of the pact argue that it makes the island too economically dependent on Beijing.

One unlooked for effect: the deal boosted investor confidence in Taiwan, pushing up its currency. Since a stronger NT affects Taiwan's exports, the central bank was busy dumping NT dollars last night to offset the pressure on the NT to move up. BBC's Cindy Sui, whose balance and depth is a welcome departure from the usual pro-China line at BBC, had another long and sturdy look at ECFA yesterday:

That, critics and others say, could give Beijing a way to control Taiwan's politics, society and sovereignty.

"In the years to come after the FTA is signed, it may be very difficult to separate Taiwan from China," said Sung Kuo-chen, a research fellow specialising in Taiwan-China relations at the National Chengchi University in Taipei.

"For example, the fruits you buy may be Chinese, many people around you may be Chinese compatriots. Eventually, you might be able to take Taiwanese currency and use it in China. In that sense, what is separate about China and Taiwan?"

Perhaps 50 years from now, Taiwan may be like a province of China in all but name, some analysts say.

Taiwan may very well be able to keep its current democratic system and self-rule, and China's leaders may even eventually accept the concept of Taiwan having a president, analysts say.

Finally, an acquaintance of mine passed around this witty Chinese tone drill from her father on Taiwan-China relations: The Four stages of Tong: 1 通, 2 同 , 3 統 , 4 痛

"China to Drop Tariff on Taiwanese Bike PartsSportsOneSource Media Posted: 6/29/2010China and Taiwan signed a landmark trade agreement Tuesday that will greatly lower tariffs on Taiwanese bicycles and bicycle parts imported into China.

China now collects a 17% tariff on bicycles and bicycle parts imported from Taiwan. Under the Economic and Co-operation Framework Agreement, that tariff would be eliminated over three years.

In an interview with the Financial Times, the CFO for Giant Manufacturing, the world’s largest bike maker, said the deal would enable it to export more carbon fiber bikes to the mainland. Giant currently makes it high end bikes in Taiwan and uses factories in China for more moderately priced aluminum and steel framed bikes."

** So ... Taiwan's opportunity to maintain a "point of difference" and produce technical, high end quality "finished" products in Taiwan,(the high end range of bikes as example?)... will soon be history.

As Ross Perot might ask, "Can you hear that sucking sound". That's the sound of the few remaining jobs left in yet another Taiwan industry.

"Taiwan has been badly battered by the global economic crisis that began in 2008. It was unable to jump-start its export-oriented economy without full and free access to China's massive market."

really?? A quick look at the numbers would have shown that export orders have been heating up for months, completely independently of ECFA. I can't find the articles on this that Michael linked to a week or so ago, but somebody might want to dig them up and point them out to these so-called reporters.

Also,

""Taiwan needed this trade deal far more than China. The mainland has signed similar free-trade agreements with the 10 member-nations of ASEAN, the Association of Southeast Asian Nations, and Beijing is in talks for similar deals with South Korea and Japan. None of those countries would negotiate similar arrangements with Taiwan -- which is diplomatically isolated in the region -- unless it had first reached its own deal with China.

Way to not point out all of the (widely-available) evidence casting doubt that these other putative FTAs will ever happen. But then, it's John Pomfret and two researchers in China, so what do you expect.

"Taiwan has been badly battered by the global economic crisis that began in 2008. It was unable to jump-start its export-oriented economy without full and free access to China's massive market."

really?? A quick look at the numbers would have shown that export orders have been heating up for months, completely independently of ECFA. I can't find the articles on this that Michael linked to a week or so ago, but somebody might want to dig them up and point them out to these so-called reporters.

Also,

""Taiwan needed this trade deal far more than China. The mainland has signed similar free-trade agreements with the 10 member-nations of ASEAN, the Association of Southeast Asian Nations, and Beijing is in talks for similar deals with South Korea and Japan. None of those countries would negotiate similar arrangements with Taiwan -- which is diplomatically isolated in the region -- unless it had first reached its own deal with China.

Way to not point out all of the (widely-available) evidence casting doubt that these other putative FTAs will ever happen. But then, it's John Pomfret and two researchers in China, so what do you expect.

Unfortunately, I don't believe the U.S. population could give a rats ass about what happens on Taiwan today. They have far too much on their minds and do NOT wish to support anyone outside the border. Protectionism is alive.

The media, is far too busy reporting on 2 wars, lost jobs, lost homes, oil spills, mutinous generals, Sarah Palin and Tiger Woods to really begin to understand what is happening on Taiwan.

Pomfret serves Pomfret and continues to try and justify his existence in print.

Why, surely with all the great content being pumped out by the Liberty Times and the appalling behavior by the pan-Blues... the Taiwanese will surely vote out the foreign KMT looking to enslave them over the next 2 years.

Keep writing to the Washington Post. The report "Logntime rivals China, Taiwan sign trade pact" , like those from AP, AFP, is one-sided, with only a very small paragraph covering the different in a negative tone: Still, the pact has generated intense resistance...

It's true that most Americans don't give a rats ass to what's happening between Taiwan and China. But we still make ourselves heard.

If you are looking for something pointing out the political nature of the ECFA, try The Economist:

"China’s largesse is clearly political. It has learned that sabre-rattling, such as it employed in 1996 by launching ballistic missiles over the island, only encourages Taiwanese voters to choose pro-independence politicians. Now it is trying economic sweeteners instead. It hopes that these will prompt voters to choose Mr Ma’s Kuomintang party in the 2012 presidential election rather than the independence-leaning Democratic Progressive Party (DPP).

So Mr Ma must now prove that the ECFA will indeed help Taiwan sign free-trade pacts with other countries, or else risk a public backlash. Much here depends on what Taiwan calls itself in these agreements. 'Republic of Taiwan' would please the voters but infuriate China; 'Taiwan, Province of China' would do the reverse. Mr Ma has talked of a possible compromise: Taiwan’s WTO moniker, 'The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu'. The DPP claims that China will use its clout to block other Taiwanese free-trade deals no matter the nomenclature. When asked about it on June 24th, Zheng Lizhong, who led China’s talks, appeared to duck the question."

HOT! HOT! HOT!

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